Overcome Buyer Reluctance and Make The Offer!

The biggest challenge in real estate that I’m hearing from my agents these days is the buyers reluctance to make an offer. They cite various reasons, the most prevalent being the concern that “home prices will continue to drop”.  I think this is the same old fear that buyers have always had, just dressed in new clothing.  And that  is that there is an underlying concern that has not been addressed, and it is up to you as a real estate professional to find out what it is.

Every market has different challenges, either prices are going up or they are going down, interest rates are either going up or going down, and the same for cash flow. There has always been a buyers reluctance in every market and you the agent,  have a choice to either buy into their reluctance or see it for what it is. Drill deep and find out what the real issues are for your client, address that issue and then ask “do you think home prices will ever increase again”?

Of course they will and then you can move on to the close,  ”If we find the right home for you today that has most of your important wants, is there any reason that you wouldn’t want to make an offer”.

 

21 Ways to Help Your REO Offer Get Accepted

I recently attended a National Real Estate Institute Negotiating Bank Owned Properties seminar and thought that I would condense down the highlights for those of you who are writing REO offers.

1. Keep it simple–no novel writing, these offers are sent electronically and are usually reduced down to the net.

2. Try to have close of escrow on or before the 25th of the month. Takes about 3 days for bank wires. Banks are assessed their handling charges on the first and if they have not received the check before the EOM then there is an additional charge for them.

3. Try to limit contingencies and most banks will not accept  a sale of home contingency.

4. Do not call listing agent and ask “what will it take“, listing agents have no idea what the asset manager will accept.

5.Most banks will not allow an assigner.

6. Most banks will not pay a commission on an agent as principle buyer representing himself.

7. Banks prefer preapproval from banks rather than mortgage brokers.

8. Sellers are not required to pay for title so if buyer wants to pay all costs then they can dictate title company.

9. Banks will bring HOA current,  just make sure to address in offer.

10.  Even if you come in at full list, expect a counter. Council your buyer to expect counter but still offer highest and best to eliminate competition.

11. Always keep in the game and recounter.

12. When there are multiple offers and you receive a Highest and Best request from the bank-it is usually a 24 hour timeframe, but always check with the listing agent.

13.Asset managers are not emotionally invested, they usually have between 400 and 500 files to get off their desks.

14. Timelines vary on the response time for offers anywhere from 24 hours to two weeks.

15. Bank’s position is that they are responsible for only known conditions. Be sure to read the “AS IS” addendum carefully, particularly a clause that states if repairs exceed 5% of value, property reverts to “as is”.

16. If you extend COE, make sure you also extend the financial contingency, otherwise EMD goes hard.

17.  Try to limit Due Diligence to 3 days.

18. If you can document with a licensed inspector and send the inspection report listing the repairs to the listing agent, your chances are fairly good that they will be taken care of.

19. Most lenders will not allow credits for repairs at close of escrow.

20. Most banks will not accept bank wired earnest deposit, they will ask for certified funds.

21. Make sure that everything that you want the seller to pay for has the exact dollar amount including the appraisal. Offers are accepted on the “net”.

I hope these simple tips help you get more of your REO offers accepted  and wishing you  much success in 2009!!

 

NAR Call to Action to Preserve FHA Loan Limits

If you are not aware the HUD is set to lower the threshold amount for FHA loans in the Las Vegas Valley. This would make it more difficult to gain FHA loans for homes in excess of approximately $250,000. There is a call to action from the National Association of REALTORS® to contact your Senators and Representatives of Congress to support a plan that would render FHA loans at an amount closer to their current limits permanently, approximately $400,000.

At this TAKE ACTION WEB SITE you can find more information and a very easy way to send a letter to your representatives.

I encourage you to take the time to visit the above site Contact Congress today and ask them to include National Association of REALTORS®’s Four-Points in the next stimulus package.

National Association of REALTORS® Four Point Plan

The most recent economic stimulus bill, the Emergency Economic Stabilization Act, was a good first step towards stabilizing our nation’s economy. Unfortunately, a number of the Act’s provisions have not proven to be as useful at stabilizing the nation’s housing markets as was first thought.

Congress may consider second economic stimulus bill this month. If they do, there are a number of changes that could help to provide more stability to the nation’s real estate markets which most agree is a necessary step towards recovery.

NAR has urged Congress to include the following provisions in any future legislation:

• Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement. The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers. As a result, the credit has not been widely used or proven effective at stimulating sales.
• Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.
• Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures. Don’t just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.
• Permanently bar banks and banking conglomerates from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply properly manage their current lines of business. Do we really want them to manage on the home buying process? Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

 

THE SCOOP ON NEW FHA GUIDELINES…OR WHAT NEW FRESH HELL IS THIS?

        

       OK gang, fasten your seat belts because in case some of you have been living under a rock for the last few months and haven’t heard, as of October 1, Seller Funded Down Payment Assistance is gone!

      However, your buyers can still use Down Payment Assistance from the following sources: Family, Friends, Employer, or Church Organization.  There is some legislation in the works to bring it back but if that ever happens it probably won’t be until after the new year and I would imagine with some pretty stringent guidelines, so in the meantime it will be interesting to see how “Friends and Family” are defined.  

     Also if a buyer owns a primary residence, with the intent of purchasing a new home as their primary residence, in order to use rental income or projected rental income on their existing home to qualify for a new home, the buyer must have a minimum of 25% equity in their current property. If not, then the buyer must qualify with both morgage payments. If there is 25% equity, then the property may be subject to an appraisal or field review to verify.

     Ready for some good news now…….The increase to 3.5% minimum downpayment has been postponed to January 1, 2009 or until further notice from the Dept. of HUD.  So at least for a few more months it will remain at 3% and if the rumor mill is true, various sources say that the Seller Funded Down Payment Assistance should return after the new year.

 

How to navigate the “short sale” offer.

     I know a lot of agents who are advising their clients not to look at “short sale” homes and I can certainly understand their reasoning. I’ve heard the horror stories of clients waiting 5 months to receive an answer from the bank or not being notified that a Notice Of Default  has been filed, however in this changing market, short sales are becoming more viable over the multiple offer foreclosure situation.  To be able to offer the highest possible level of customer service to your clients, you may want to consider navigating the process with a road map. One of the best advise tips that I’ve seen comes from Debbie Tuttle an agent with Prudential Americana Group who offers;  

                                                    “12 Questions to Ask The Short Sale Listing Agent” 

1.    Have you ever closed a short sale before?
2.    How do you handle offers?  Do you submit them all to the bank, not having your sellers sign (which, in effect, means there is no valid offer and acceptance) and let the bank figure it out?  Or do you use multiple offer protocol, notify all agents to submit their highest and best offers, review them with the seller, have the seller accept or counter the best offer and them submit to the bank(s) for acceptance?
3.    Have you requested and received the short sale package from the bank, including the hardship letter? 
4.    And more importantly, has the seller completed the hardship package?  Have you confirmed receipt of the package from the bank?
5.    What communication, if any, have you had with the bank?
6.    Has the bank approved the list price?
7.    Have you received any other offers that you are waiting to hear back on from the bank?  Has the property been approved for a short sale prior and not closed?
8.    Does the loan have PMI (mortgage insurance) which may require another level of approval or a pre-payment penalty?
9.    Is there 1 or 2 deeds of trust?  Any other liens? 
10.    What is the name of the bank(s)?  Is the loan FHA or VA – again may require additional levels of approval?
11.    How long do you estimate that the lender will take to provide an answer to an offer?
12.    How far away from foreclosure is the seller?  Has a Notice of Default or Notice of Sale been filed?

Receiving the answers to these key questions should help you through the rough waters of short sales and into the smoother sailing escrow process.

 

7 SYSTEMS TO INCREASE YOUR REAL ESTATE BUSINESS NOW!

Sounds too good to be true-right? However these systems are the backbone of all of my successful agents  who are either individual agents or large top producing teams. Without fail as I coach and mentor agents into implementing “business systems” into their real estate business,  their real estate production increases.

I wrote in my last blog about Stephen R.Coveys’ “The 7 Habits of Highly Effective People”, the 2nd habit is “seeing the end result” (the first habit is being proactive) and having a blueprint of how to get the end result. Think of these 7 systems as being the tools to build your end result of having unparalleled customer service and increased production.

Having specific business systems’ in place which create and generate business, whether you’re there or not, is the difference between generating one unit of work for each unit of time OR generating 100’s units of work for the same unit of time. Systems allow you to be more efficient and effective, let’s face it, your real estate business is no different than the corner Starbucks, who is a coporate leader in effectivly using systems to increase production.

The following are the 7 essential business systems for creating success:

1. Create your “Core Principles” and Mission statement.

2. Develop your Business Plan

3. Implement your Personal Marketing and “Brand Name Recognition” 

4. Utilize a professional Listing Presentation.

5. Develop your Farm

6.Define your SOI and Contact system

7. Build your Lead Generation and Follow Up system.

In coaching with Agents, this process of defining and building all seven of these usually takes about 9 to 12 months depending on the individual. It helps to have well written 30 day goals and someone who will hold you accountable to those goals. It may take a great deal of time and effort but the end result will be worth it. You will have a business that runs efficiently and allows you to be proactive rather than reactive and proactive is always more ZEN.

 

Profit Seeking versus Prospecting in Real Estate…

What’s the difference between profit seeking versus prospecting in real estate?

Although this might sound like just a semantic difference, I believe the underlying value is the Grand Canyon of difference. I guess after 20 years in real estate I shouldn’t be surprised when I hear agents tell me “real estate is hard” and they hate to prospect….hmmm, there just might be a correlation there. I think one of the reasons that agents find this business difficult or hard is that they are not continually building their business and generating new sources of revenue.

It should come as no surprise that just as with every other successful business enterprise, having a real estate business, whether you’re a brokerage of one or many, profit seeking should be your second highest commitment. The first, of course is unparalleled customer service. If, as Stephen Covey suggests in “The 7 Habits of Highly Effective People”, ( Habit #2 “Begin with the end in mind), envision the final result before starting a new endeavor. Deciding on what profit you want to obtain is the first step.

His analogy of building a house was perfect; we don’t just go out and start building, it would be far too costly and full of mistakes. Instead we first envision our new home, then blueprints are drawn, plans are made, etc. So it is with real estate. Your profit seeking activities such as Open Houses, Internet Marketing, Direct Mail, should be seen as just that, activities that will bring you profit rather than prospecting which is not as directly tied to your end result.

My challenge to you is if you do not know what profit you want to have at the end of the next 12 months, take that first step and envision your future.

 

Two kinds of real estate agents

Real estate agents can be divided into two distinct categories:

                  THOSE WHO MAKE ENOUGH MONEY AND THOSE WHO DON’T

What are some of the common characteristics of agents who make enough money?

There are three traits that they all seem to share and the first one that I see is confidence. Think about someone who you know who is confident, don’t they automatically instill trust?   

The second is enthusiasm, this comes across as enjoying what they do and being fully engaged in the process. Working with them is an enjoyable process because they focus on the positive.

And the third trait is self accountability.  Successful agents are successful because they take responsibility for their own success or failure, rather than placing blame outside of themselves.  An example of explanation that I hear from agents who are making enough money is that they credit their success to hard work and staying on top of the market trends.  

And what about agents who aren’t making enough money?

They also have some common traits that I see, and the first one is Fear. This shows up in many different ways for many different reasons.  Perhaps it’s because they’re new and fearful of the process, or uncertain of their own abilities. Perhaps they fear their financial future.  Can they pay the bills and make a success of this career choice?  This uncertainty comes across to clients as a lack of trust and non-focus.

The second is not being emotionally engaged.  Obviously if there is fear and uncertainty,  how vested can they be in the future? How enthusiastic will they be about prospecting and how well will they be able to think outside the box for new opportunities?

And the last and probably most important trait for agents who aren’t making enough money, is that they blame everything outside of themselves for their lack of success.  An example that I hear from agents who aren’t making enough money is “the market is terrible”,  “there aren’t any qualified buyers”, and “open houses don’t work” to name a few.

When I spoke of these traits at my last sales meeting, an agent came to me and said. “Well I’m not making enough money but I have all of the traits of an agent who is.”   So, I asked her what was she most excited about doing to increase her business and she responded that she didn’t want to do anything different, she really wasn’t excited about real estate anymore after all of the years in the business.  She then smiled and said “that probably means I don’t have all of the traits because I’m not enthusiastic, right?”  We then talked about things that she could do that she could get excited about and she left more confident and engaged in her business.

I would urge agents who aren’t making enough money to look at the above and take an honest accounting of where they are and then the steps they need to take to turn their business around.  And, oh by the way, have some fun doing it!

 

Single most important thing…

In meditation the single most important thing is to “be present“, and I think that is true in real estate also.

How to be “present” in real estate I think is being focused every day on whats most important, and what is most important is connecting with people and setting appointments. Tom Ferry  your coach.com recommends 20 appointments a month for success, and I would say that would be a minimum. Particularly if you count the people you meet at an Open House as appointments and if you are an extraordinary agent who does extraordinary open houses twice a week. The key is to optimize your open houses.

                                               Rules to Optimize Your Open House:

1. Pick a foreclosure home close to high traffic street.

2. Use at least 8 signs with the words “foreclosure open house” to guide traffic.

3. Have lender there to pre-qual.

4. Have printout with pictures  of at lest 10 lesser/more priced homes for prospective buyers on display board  

5. Have partner at open house to alternate taking prospective buyers to other properties.

6. Be consistent and make a commitment to two open houses a week!

 

 

Latest Trends in the Las Vegas Foreclosure Market

   I wish I had a nickel for every time that I’m asked “do you think we’ve hit the bottom”. If you have a real estate license then I’m sure you’ve also been asked to look into your crystal ball and predict the future. I’ve learned many years ago that instead of making predictions, it’s always best to relay the most up to date information and let the client decide.

So what’s the latest trend? In managing one of the largest offices with some of the top REO teams, I have a unique advantage of seeing the day to day foreclosure market under a microscope so to speak. What I’m seeing more and more of is multiple offers on REO properties. Add this to the announcement made a few days ago by a VP with Countrywide that they have 17% less product coming on the market this month than the last few months and there are now currently over 4,000 Las Vegas properties in escrow.

What does this tell me? I see this as one of the first signs that investors and buyers are taking advantage of the the tremendous opportunities of value that is out there. In fact I believe this so strongly that not only am I personally making offers on some amazing REO homes but I would suggest that you gather your friends and family together, look at the investment opportunities and see if they’re right for you.